The relationship between managing money and mental health – and why it matters in the workplace


There is a clear two-way relationship between financial wellbeing and mental health. This relationship can be particularly apparent at this time of year.  Festive celebrations take their toll on most people’s bank balances. Overspending on Christmas, and the pressures of a long month in January can make any underlying financial issues worse.  This can create significant worries that affect lives in and out of work.

women  looking in purse financial worry

But it’s not just Christmas that has an effect on financial wellbeing.  The way people work is changing; zero-hours contracts, self-employment and the gig economy.  These less stable forms of employment can create greater concerns and worries around finances, in turn, impacting mental health.

How are financial worries affecting employees? 

A report from Willis Towers Watson revealed that in 2017, the percentage of employees satisfied with their financial situation decreased to 43 per cent1.  Research from the CIPD also reports that over a quarter of employees felt less secure financially in 2017 than they did at the start of 2016,  and more than half (58 per cent) face barriers in managing their finances as well as they would like2.

The Willis Towers Watson figures also showed that 42 per cent of employees often worry about their current financial state and 52 per cent worry about their future finances1.  Moreover, two fifths have experienced a significant financial event in the last two years;  things like unexpected medical expenses, divorce or separation or having to use payday loans1.

What is the effect on mental health?

The strains of having financial problems can really affect mental health.  It can influence our stress levels, our ability to make decisions and how we focus on tasks.  Debt can also be a factor that triggers more serious mental health conditions such as anxiety and depression.

Over a quarter of employees surveyed by Willis Towers Watson believe that financial problems negatively impact their lives1, and a BITC report revealed that 34 per cent feel that their financial situation negatively affects their mental health3

Why does this matter in the workplace?

Employees who are experiencing financial worries are more likely to take time off work due to stress.  If they do come into work, they might not be able to focus, won’t be engaged in their work and productivity will be affected. In fact, a quarter of workers report that money worries have affected their ability to do their job2.

Stress is a growing cause of absence. Half of the respondents in the CIPD/Simplyhealth Health and Well-being at Work 2018 report identify stress as one of the top three causes of long term absence, and 39 per cent as a top three cause of short term absence4.  Furthermore, financial concerns are reported as a main cause of stress at work by 7 per cent of respondents in the CIPD report4, and 8 per cent of the UK workforce have taken time off work because of financial stress5.

The money/mental health relationship can be a vicious circle.  As much as finances can affect mental health, if you experience problems with mental health, it can negatively affect your finances.  For this reason, it’s important for employers to be aware of and have plans in place to support employees experiencing mental ill health,  who might fall into financial trouble as a result.

What can employers do help?

There are a number of things employers can do to support their employees’ financial wellbeing, in turn, helping improve mental health. It starts with ensuring that your organisation has a robust strategy in place for supporting financial wellbeing, integrating it into your wider health and wellbeing policies.

Encouragingly, 35 per cent of respondents in the CIPD/Simplyhealth Health and Well-being at Work 2018 report said that their health and wellbeing activity is designed to promote financial wellbeing4, such as providing pension advice or offering debt counselling.  And according to Willis Towers Watson research, the majority of employers understand the important role they play in supporting financial wellbeing – 69 per cent believe they should be active in encouraging employees to manage their finances better1.

Addressing underlying causes

Employers should think about helping employees address the underlying causes of any financial issues.  It can be helpful to start by breaking your workforce down into segments.  Different age groups will have different financial priorities, and it’s important that you have an understanding of these spending and saving behaviours.

For example,  the younger people in your workforce might be affected by education debts,  as well as trying to find the money for first homes.  You could consider offering matched savings in lieu of pension,  which can go towards paying off student loans, or help with home costs.  Older employees will be preparing for later life, and might need support with topping up their pension savings and adjusting budgets to suit their retirement lifestyle.

Taking practical steps

Organisations should also think about the practical steps they can take to help employees create and stick to a budget,  keep track of their spending, and meet their financial commitments.  Focus in these three areas:

  • Encourage openness. Sadly, more than half (56 per cent) of employees don’t feel comfortable talking about money issues at work3.  As you would with mental health, make it okay to talk about financial concerns.
  • Communication. There’s an important piece around communication that employers should be aware of.  Make sure your employees know what is available to help them financially.  For example, pay advances, hardship loans, travels loans, EAP access, SAYE schemes, or financial education programmes. Even just reminding employees to make best use of their employee discounts can help.
  • Effective signposting. Ensure your line managers are fully equipped to help employees who might present financial concerns. As well as being able to direct employees to internal resources, they should also be aware of external agencies that can provide free help and guidance; the Money Advice Service, Step Change and Citizens Advice are good places to start.

Read more about how to help employees look after their financial wellbeing, in this free guide from Simplyhealth. 

This article was provided by Simplyhealth. 

References

  1. Willis Towers Watson 2017/2018 Global Benefits Attitudes Survey
  2. CIPD/Close Brothers Employee Financial Well-being research report 2017
  3. Business in the Community Mental Health at Work 2018 report
  4. CIPD/Simplyhealth Health and Well-being at Work 2018 report
  5. Neyber - The DNA of financial wellbeing: summary report 2016

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